Investment Highlights

• We maintain our BUY call, forecasts and SOP-based FV of RM1.35 (Exhibit 2) for Ekovest.

• The company’s 1HFY18 core net profit of RM94.8mil came within expectation at 56% of both our full-year forecast and full-year consensus estimates.

• Ekovest's 1HFY18 net profit rose 17% YoY largely underpinned by: 1) progress billings from EkoCheras property project; and 2) increased toll collection from the newly opened Duke Phase 2 in 2Q18.

• These were partially offset by lower billings from its construction projects. Also, 1HFY18 construction EBIT dipped 24% YoY due to a high base a year ago, driven by the high-margin Duke Phase 2 project.

• On a brighter note, we believe Ekovest will post better earnings in the 2HFY18 underpinned by: 1) accelerated billings from its key construction projects such as Setiawangsa – Pantai Expressway (SPE); and 2) better sales from its property projects (i.e. EkoTitiwangsa & EkoCheras).

• Meanwhile, we are keeping our assumption for Ekovest's construction job wins at RM1bil annually FY18-20F respectively.

• We continue to like Ekovest for: 1) the current share price is trading a steep ~50% discount to our base case valuation of RM1.80 largely due to the market’s negative over-reaction to Ekovest’s proposed acquisition of IWCity, 2) strong outstanding construction order book of RM14bil; 3) strong earnings visibility over the coming years from the sizeable outstanding order book; and 4) sturdy recurring income from toll concessions lasting up to August 2069.

Source: AmInvest Research - 28 Feb 2018